Stablecoin is one of the waves in the cryptocurrency world right now, and as you know it, it has been getting a whole lot of media focus especially in Q4 of 2018. A Stablecoin in its simplest form is a stable, collateralized asset blockchain which is used in hedging against the constant decline and volatility that is experienced in the cryptocurrency market. It is somewhat a path of investment taken by people in order to escape the volatility of the cryptocurrency market. Stablecoins are backed by real assets, most of which fiat currencies with the US Dollar being the popular one. They simply reflect the value of the asset of which it is backed.
THE STORY SO FAR
The first ever Stablecoin is BitUSD and it was launched in July 2014 on the cryptocurrency trading platform; BitUSD didn’t get much market popularity probably because they didn’t get their price pegging algorithm right. Next was Tether (USDT) which was issued on the 10th month of that same year, but it was initially called Realcoin. Tether was initially assumed to be pegged with the US dollar, especially as nobody knew where the funds were banked, and there was little or no attempt to do an audit for the project. This coupled with a whole lot of other miscalculations coupled with failing to secure a steady bank account made it one of the slowest blockchain startups as it is currently facing a problem of confidence. However, the fact that Tether failed to achieve its objective didn’t deter other cryptocurrency projects, and the past year (2018) showed evidence as stablecoin like Gemini USD (GUSD), USDC, TrueUSD (RUSD) were all issued. Each one of these stablecoins were backed by audited funds, creating somewhat an assurance to investors that every single token of these stablecoins will keep to their pegs. The most popular stablecoin still remains Tether though, with a 1:1 peg to the US dollar. Its market cap currently sits at $1.92 billion but most experts expect Tether to face a competitive year, especially as they are laced with transparency issues.
STABLECOIN AND 2019
The previous years have seen Tether control the 96% stablecoin market share, which recently dropped to 78% by the way. 2019 promises a year of further plummeting of this share price, especially as stablecoin projects like TrueUSD and USDC has been working on what Tether has refused to work o in years. The secrecy path that Tether has decided to take has affected it, and it has in general attracted critics on the whole stablecoin concept. Reecently, Facebook announced that it is going to launch a stablecoin for payment using its WhatsApp platform. If everything goes according to plan, the Japanese yen in march will be pegged with a stablecoin that will be launched by one of the biggest commercial bank in the country; Mizhuo Bank. PwC is not left out of the trend as they have announced the collaboration with Cred, which is a decentralized lending platform in launching a stablecoin that is to be pegged with the US dollar.
Japan’s biggest cryptocurrency exchange forum – Binance – recently listed two stablecoin pairs which are PAX and TUSD. PAX is issued by Paxos Trust Company and it is to be pegged with the US dollar, however it is expected to pair with BNB and BTC when it starts trading. The United State do not seem to be left out in the 2019 story of stablecoin, word on the net suggests that Texas Department of Banking recently released a statement, suggesting that an instutionalized stablecoin may be considered of monetary value under Money Service Act of the state. Apart from stablecoins backed by fiat currencies, 2019 promises to be a year that will see an increase of stablecoins that are backed by precious metals. Gold and silver are generally known to be assets. The stablecoin projects, backed by assets that we expect in 2019 are Tiberius Coin, Kinesis and Digix.
To conclude, the crypto market with no doubts is volatile, and most coins in the cryptocurrency market are unable to stand the test of time because of this volatility. This is why stablecoins is the future, especially for those who are scared of the cryptocurrency market. One might be tempted to call the concept of stablecoins another Forex market, but it actual sense, it is not.